Reserve Bk projects India’s inflation at 4.6% for 2026-27

mumbai

The RBI on Wednesday projected retail inflation for the current financial year at 4.6%, well within the government-mandated inflation target range of 4% with a tolerance band of +/- 2%.

Before the outbreak of the West Asia conflict, India's macroeconomic fundamentals exuded confidence with buoyant growth and low inflation. Conditions turned adverse in March with the widening of the conflict zone and its intensification.

The Consumer Price Index (CPI) based retail inflation during the April–June quarter (Q1) is estimated at 4%; Q2 at 4.4%; Q3 at 5.2%; and Q4 at 4.7%, RBI Governor Sanjay Malhotra said.

He said the MPC, which met for three days to deliberate on the benchmark interest rate (repo), noted that since the last policy meeting, geopolitical uncertainties have heightened significantly.

"Headline inflation remains contained and below the target. However, upside risks to the inflation outlook, driven by increased energy price pressures and probable weather disturbances affecting food prices, have increased," the Governor said.

Also, core inflation pressures remain muted, although supply chain dislocations and the risk of second-round effects render the future inflation trajectory uncertain.

Malhotra also said the economy is confronted with a supply shock, and it is prudent to wait and watch the changing circumstances and the evolving growth-inflation outlook, as the MPC decided to keep the repo rate unchanged at 5.25%.

Iran ceasefire taken into account for policy decision

RBI Governor Sanjay Malhotra on Wednesday termed the ceasefire between the US and Iran as "pleasant news", which was taken into account while taking the policy decision hours later. "At 5:30 am, we got some pleasant news, maybe not a complete surprise," Malhotra told reporters at the customary post-policy-review interaction. "The ceasefire, to some extent, has been taken into account. The whole implications [will come later], but the ceasefire has been taken into account in the monetary policy decision," he added.